Bronchopulmonary dysplasia, BPD, is characterized by alveolar hypoplasia, thought to result from arrested distal lung morphogenesis. Currently, inflammation and pro-fibrotic growth factors, such as TGF-beta, are deemed as major causes of injury. In human premature neonates, lung TGF-beta correlates with severity of BPD. The current project proposes to examine the role of TGF-beta within the context of the following hypothesis: Hypothesis: Mediators of injury and in particular the TGF-beta1-activated SMAD3 interfere with normal developmental pathways & result in pathogenesis of BPD. To test the above hypothesis, we propose three Specific Aims: Specific aim 1. To determine whether, and to what extent, neonatal Smad3(-/-) mice are protected against hyperoxia-, or virally delivered TGF-beta1-induced alveolar hypoplasia? Specific aim 2. To determine whether explanted embryonic Smad3(-/-) lungs are protected against pathological role of TGF-beta1? Specific aim 3. To determine whether conditional overexpression of Smad3 causes structural abnormalities and null or partial SP-B deficiency in perinatal and postnatal transgenic mice? Significance: Interplay between injury and normal lung morphogenesis is thought to be etiologic of BPD. This project presents a unique opportunity to elucidate precisely how TGF-beta, as a known mediator of injury, disrupts lung morphogenesis by affecting, through SMAD3, the normal function of key morphoregulatory transcription factors such as NKX2.1.